MCViewPoint

Opinion from a Libertarian ViewPoint

Erie Times E-Edition Article-House Dems object to Biden tax plan

Posted by M. C. on May 8, 2021

Good for farmers. Apparently your bought and paid for family inheritance is not so worthy.

https://erietimes-pa-app.newsmemory.com/?publink=0eb6e3c01_1345d70

Exemption for family farms needed, group of rural lawmakers says

Lindsey McPherson

Cq-Roll Call

WASHINGTON – A group of 13 House Democrats, led by Iowa’s Cindy Axne and California’s Jim Costa, is pressing party leaders to exempt family farms from a tax increase President Joe Biden has proposed on inherited assets to help pay for new child care, education and other spending.

Under Biden’s $1.8 trillion package of family related assistance, heirs would no longer receive “stepped up basis” for capital gains tax purposes, which resets the value of inherited property to the date of death.

Instead they’d be liable for the tax on the full appreciation in value from the time the original owner purchased the assets, in some cases decades earlier.

“The requirement to recognize capital gains at death runs the risk of forcing farms and ranches to sell part, or all, of a farm that may have been passed down for several generations in order to pay the tax burden,” the group wrote in a letter to Speaker Nancy Pelosi, House Majority Leader Steny H. Hoyer and Ways and Means Chairman Richard E. Neal.

Biden’s proposal would start taxing gains on inherited assets above $1 million, or $2.5 million per couple factoring in the current tax exclusion for up to $500,000 in gains on a primary residence. Biden also would raise the top capital gains tax rate from the current 23.8%to 43.4% for those earning above $1 million annually.

Biden’s proposal calls for “protections so that family owned businesses and farms will not have to pay taxes when given to heirs who continue to run the business,” sparing them from having to pay the tax immediately upon the original owner’s death.

But the White House’s fact sheet doesn’t provide detail on how that would work. And when the Joint Committee on Taxation analyzed a similar proposal from former President Obama, it found that such rules “are likely to be highly complex and, because of the attractiveness of the deferral benefit they provide, could become a significant source of disputes with” the IRS.

The rural Democrats joining Axne and Costa in the letter expressing concern about Biden’s proposal are Illinois’ Cheri Bustos; Minnesota’s Angie Craig; New York’s Antonio Delgado; Oregon’s Kurt Schrader; Virginia’s Abigail Spanberger; Arizona’s Tom O’Halleran; Washington’s Kim Schrier; and Californians Julia Brownley, Salud Carbajal, John Garamendi and Josh Harder.

The House Republicans’ campaign arm is targeting most of those 13 Democrats in the 2022 midterms. Brownley and Carbajal are the only two not on the National Republican Congressional Committee’s list of incumbents they think they can oust.

Of those signing the letter, six are on the Democratic Congressional Campaign Committee’s Frontline program list of lawmakers set for special help with their midterm races: Axne, Craig, Spanberger, O’Halleran, Harder and Schrier. “The repeal of stepped-up basis for capital gains and immediate taxation could especially hurt family farms, some of which have been in families for generations; therefore, we strongly urge you to provide full exemptions for these family farms and small businesses that are critical to our communities,” the group wrote.

Groups like the American Farm Bureau Federation have fought against proposals to repeal stepped up basis for years.

In a report last month, the Farm Bureau co-authored with the American Soybean Association, the groups looked at Agriculture Department data going back to 1997 and found the average value of cropland has risen 223% since. That could lead to such steep tax bills that affected farms would need years to pay it off, the report said. In a handful of states, including Iowa and Minnesota, the average increase in value tops 300%.

The Democratic letter-writers acknowledged that Biden’s intent is to ensure vast fortunes are not passed on without any taxation and that the president promised protections for familyowned businesses and farms.

Be seeing you

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